Renewal of Pakistan-Russia gas project | By Syed Qamar Afzal Rizvi

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Renewal of Pakistan-Russia gas project


RECENTLY, Pakistan and Russia have signed a revised deal for laying the Pakistan Stream Gas Pipeline, formerly known as the North South Gas Pipeline, with major shareholding for Islamabad.

In the revised project structure, Pakistan will hold 74% shares whereas Russia will have 26% stake.

Earlier, Russia had to build the pipeline on the build, own, operate and transfer (BOOT) model and transfer its ownership to Pakistan after 25 years.

In the past, Pakistan and Russia could not develop close ties because neither country fully trusted the other.

However, given the mutual benefits to building relations, as discussed in this article, both countries are trying to move forward past lingering mistrust.

For instance, Russia is apprehensive of Pakistan’s close alliances with the West, which have been established since early Cold War years, and it is now observing the nature of Pakistan’s deepening strategic relations with China. Likewise, Islamabad is concerned of Russia’s strategic relations with India.

Over the past decade, with shifts in the international system (e.g., Russia’s resurgence under President Vladimir Putin and the deterioration of US relations with Russia and Pakistan) have provided both countries a Machiavellian common cause by which to reevaluate their mutual relations.

Russia is finding new opportunities in South Asia as the United States contemplates withdrawing from Afghanistan and simultaneously confronts Iran.

Pakistan is attempting to influence its geo-economic significance, boosted by the fast-developing China–Pakistan Economic Corridor (CPEC)—touted as a flagship of China’s Belt Road Initiative (BRI).

Nascent Russia–Pakistan relations are developing under these changing geopolitical circumstances in South Asia.

A group of Russian Gazprom-led energy companies seeks to invest $14 billion in the gas infrastructure in Pakistan, with two gas pipelines and underground storage facilities to be built.

Russia will also send some gas commodities from its Iranian deposits to Pakistan as the nation needs more and more gas.

The energy cooperation between these two is part of better ties between Moscow and Islamabad.

The two sides also agreed, in principle, to execute the project through a special purpose company, which would be incorporated in Pakistan.

Earlier, Russia had to build the pipeline on the BOOT model and transfer its ownership to Pakistan after 25 years.

Russia had also to make 85% of the required expenditure on the project whereas Pakistan had to spend 15% of the capital.

Now, in the revised model, Pakistan has money on account of gas infrastructure development cess (GIDC) and, therefore, it would contribute 74% of the capital and Russia will make 26% of the expenditure. However, Russia will provide all importable material for the pipeline.

Russia has provided a new structure for much-touted North-South Gas Pipeline Project (NSGPP) in a goodwill gesture, showing how determined and committed Moscow is for developing strategic stakes in Pakistan,
“In the last five years, the project witnessed many upheavals but the Russian side remained stuck to the project knowing the fact that Pakistan got the structures changed several times.

” Under the latest scenario, the Russian Ministry of Energy has offered TMK and ETK with its state owned company Federal State Unitary Enterprises (FSUE).

“In the last five years, the project witnessed many upheavals but the Russian side remained stuck to the project knowing the fact that Pakistan got the structures changed several times.”

Under the latest scenario, the Russian Ministry of Energy has offered TMK and ETK with its state owned company Federal State Unitary Enterprises (FSUE).

Also, Russia had to make 85 per cent of the required expenditure on the project whereas Pakistan had to spend 15 per cent of the capital.

The Russia-Pakistan Technical Committee held its first meeting on 16-18 November 2020 in Islamabad on mutual cooperation for the development of a gas pipeline project. Energy Ministries of the two countries were present in the meeting.

Discussions were aimed at finalising broad contours and parameters of the project involving construction of a high pressure gas transmission pipeline from Port Qasim (Karachi) to Kasur (Punjab) for the transportation of regasified liquefied natural gas.

According to the report, Russian President Vladimir Putin had also expressed keen interest in the project that would supply imported gas to Punjab as both sides considered the scheme an opportunity to boost their economic and strategic relationship.

The signing of the much-awaited project is expected to establish Russian footprints in Pakistan after decades.

Earlier, Russia had helped Pakistan in setting up Oil and Gas Development Company (OGDC) and Pakistan Steel Mills (PSM), the report added.

The changing power dynamics among the Gulf nations and their evolving relationships with the US-led Bloc has forced Pakistan to look elsewhere.

The enormous Chinese support to its defence and economic sectors may not be enough to support the growing challenges.

In a welcoming development, Russia has provided a new structure for much-touted North-South Gas Pipeline Project (NSGPP) in a goodwill gesture, showing how determined and committed Moscow is for developing strategic stakes in Pakistan, a senior official privy to the development told The News.

“In the last five years, the project witnessed many upheavals but the Russian side remained stuck to the project knowing the fact that Pakistan got the structures changed several times.

” Under the latest scenario, the Russian Ministry of Energy has offered TMK and ETK with its state owned company Federal State Unitary Enterprises (FSUE).

The latest energy deal comes at a time when bilateral relations between Moscow and Islamabad were warming up.

This year, recurring spats with some Gulf nations have forced Islamabad to revise its geopolitical strategy and boost independence in every domain.

Pakistan’s ties with Moscow have improved as its long-standing strategic partner India moved closer to the United States. Importantly, Pakistani-Russian military cooperation received a new impetus.

Both armies hold regular joint drills. In November, Russian Special Forces’ contingent arrived in Pakistan for a joint exercise.

Obviously, the strategists in Moscow and Islamabad are trying to fill the gap — of military cooperation with Pakistan — that has been created by America.

—The writer, an independent ‘IR’ researcher-cum-international law analyst based in Pakistan, is member of European Consortium for Political Research Standing Group on IR, Critical Peace & Conflict Studies, also a member of Washington Foreign Law Society and European Society of International Law.

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